Toyota Motor is to partially compensate suppliers for losses stemming from its cancellation of the Lexus LF-ZC electric sedan’s development.
According to a report from Nikkei Asia, the decision has been widely attributed to Kenta Kon, who took over as Toyota’s president in April.
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The LF-ZC had been conceived as a coupe featuring new battery technology and giga casting, a production method in which molten aluminium is poured into a mould, replacing the conventional approach of welding together several steel components.
First developed by Tesla, the process has attracted interest as a possible manufacturing route for future vehicles, but mass production remains challenging and defect rates are high.
Suppliers linked to Toyota are expected to face losses running into billions of yen apiece, with some companies potentially recording shortfalls of up to Y10bn ($61.54m).
A number of these firms had committed to giga casting production lines or overhauled existing facilities on the expectation that the technology would become a core manufacturing process.
Toyota’s overall compensation bill could run to tens of billions of yen, though this is anticipated to have only a modest effect on the company’s earnings.
Toyota is projecting group net profit of Y3tn for the fiscal year ending March 2027, a fall of 22% on the prior year.
According to the report, suppliers were told of the project’s cancellation by 27 May, over two years after it had begun and after involving substantial numbers of engineers and partner companies.
An unnamed Toyota source told Nikkei Asia that scrapping the project at this stage was “probably the first in Toyota’s history,” adding that earlier next-generation models such as the Prius hybrid and Mirai fuel cell vehicle had “often disregarded profitability.”
Earlier this week, Toyota Motor announced the start of the initial phase of a strategic manufacturing alliance with US aviation company Joby Aviation for the production of electric vertical take-off and landing (eVTOL) flying taxis.
